Shutdown: Congress Fails to Reach Budget Deal

WASHINGTON, DC -- The game of chicken failed. Neither side blinked. Now millions will pay the price.

Washington (CNN) -- The game of chicken failed. Neither side blinked. Now millions will pay the price.

Americans watched a colossal failure by Congress overnight: the shut down of their government.

For weeks, the House and the Senate blamed and bickered, each claiming they're standing up for what the public wants.

In the end, it led to the one outcome nobody wanted -- one that will stop 800,000 Americans from getting paid and cost the economy about $1 billion a week.

What happens next?

The Republican-controlled House and the Senate, where Democrats hold a slim majority, will try to see if they can reconcile their two versions of the spending bill at the heart of the issue. So far, each has refused to budge.

House Republicans insist the spending bill include anti-Obamacare amendments. Senate Democrats are just as insistent that it doesn't.

About an hour after the shutdown began at 12:01 a.m. ET Tuesday, House members voted to reaffirm the Obamacare amendments while also requesting a conference with the Senate to work out their differences.

But Senate Majority Leader Harry Reid already said he would not agree to such a meeting until the House presents a clean spending bill without anti-Obamacare amendments tacked on.

"We will not go to conference with a gun to our head," Reid said late Monday night.

The Senate will convene at 9:30 a.m. ET Tuesday.

House Speaker John Boehner held a press conference overnight saying he hopes Senate will agree to meet.

When asked if he had a message for the 800,000 furloughed employees -- or if he has a plan to restore back pay to them -- Boehner responded, "The House has voted to keep the government open, but we also want basic fairness for all Americans under Obamacare."

He then walked away from the podium.

Hundreds of thousands furloughed

Federal employees who are considered essential will continue working. Those deemed non-essential -- more than 800,000 -- will be furloughed, unsure when they'll be able to work or get paid again.

Most furloughed federal workers are supposed to be out of their offices within four hours of the start of business Tuesday.

The shutdown could cost the still-struggling U.S. economy about $1 billion a week in pay lost by furloughed federal workers. And that's only the tip of the iceberg.

While many agencies have reserve funds and contingency plans that would give them some short-term leeway, the economic loss would snowball as the shutdown continued.

The total economic impact is likely to be at least 10 times greater than the simple calculation of lost wages of federal workers, said Brian Kessler, economist with Moody's Analytics. His firm estimates that a three- to four-week shutdown will cost the economy about $55 billion.

Lisa Buckley, who co-owns the Denver-based American Automation security firm, counts on government contracts for 60% of her business. She's worried about how she'll pay her employees if the shutdown drags on.

"It's quite irresponsible how the government has been running the country," Buckley said. "If I ran my business like Congress has been handling the budget, I'd lose my job."

Military personnel safe

One point that the House, Senate and president agree on is that troops must still get paid.

President Barack Obama issued a statement early Tuesday to military members and Department of Defense employees about the outcome of the shutdown.

"Those of you in uniform will remain on your normal duty status," the president said. "Congress has passed, and I am signing into law, legislation to make sure you get your paychecks on time."

"To all our DOD civilians -- I know the days ahead could mean more uncertainty, including possible furloughs," the president added. "And I know this comes on top of the furloughs that many of you already endured this summer. You and your families deserve better than the dysfunction we're seeing in Congress. ... That's why I'll keep working to get Congress to reopen our government and get you back to work as soon as possible."

Congressional paychecks also safe

Although much of the federal workforce will go without pay, checks will keep coming to the 533 current members of Congress.

Why? The 27th Amendment prevents any Congress from changing its own pay. The measure was proposed in the first days of the Republic but was not ratified until 1992, after a grass-roots movement promoted the idea.

At least one member of Congress doesn't think she or the other representatives should get paid, given the circumstances.

"That is disgraceful in my view," said freshman Rep. Tulsi Gabbard, D-Hawaii. "Basically the only people who get paid in a shutdown are members of Congress, and that is irresponsible."

The combat veteran said she plans to send any pay she receives during the shutdown back to the Treasury.

Rep. John Fleming, R-Louisiana, said he hadn't thought through what he would do with his paychecks, but said he would likely donate his pay during a shutdown to charity.

"Obviously we need to share the pain of the American people," he said.

Weeks of hot potato

Last week, the Senate voted down a House GOP plan to eliminate funding for Obamacare in a short-term spending plan to keep the government running in the new fiscal year that begins Tuesday.

Democrats have pressured Boehner to give up a losing fight over Obamacare forced by tea party conservatives and instead hold a vote on a "clean" spending plan that includes no provisions seeking to undermine the health care reforms.

Wasserman Schultz predicted that such a measure would pass easily with support from all Democrats and more moderate Republicans.

Some Republicans expressed frustration Monday with the tactics of their congressional colleagues. Veteran GOP Sen. John McCain of Arizona noted that any attempt to repeal Obamacare would fail because of Obama's veto, which would require a two-thirds majority in the Senate to overcome.

"There's not 67 votes in the United States Senate, therefore, ergo, we're not going to repeal Obamacare," McCain said. "OK? That's it. We may do this for a day. We may do it for a week. We may do it for a month. It's going to end up the same way. "

GOP Rep. Charlie Dent of Pennsylvania told CNN Chief Congressional Correspondent Dana Bash that whichever party was to blame, a shutdown will make everyone look bad.

Obamacare still focus

Obama and Democrats reject what they call Republican efforts to use the threat of a government shutdown to force negotiations on the president's signature health care reforms.

Noting that the 2010 Affordable Care Act has been upheld by the Supreme Court, they say it is settled law that voters endorsed last year by re-electing Obama over GOP candidate Mitt Romney, who campaigned on repealing it.

A new CNN/ORC poll shows that Americans are not happy about the prospect of a shutdown, which is happening because Congress has been unable to pass a budget for the new fiscal year that begins Tuesday.

According to the poll, 68% of Americans think shutting down the government for even a few days is a bad idea, while 27% think it's a good idea.

And it appears most Americans would blame congressional Republicans for a shutdown: Sixty-nine percent said they agreed with the statement that the party's elected officials were acting like "spoiled children."

Democrats, however, weren't far behind: Fifty-eight percent of respondents said they too were acting like spoiled kids.

A poll later showed public support for Congress at record low levels.

Stock traders also seemed solidly against a shutdown. The Dow Jones Industrial Average fell by more than 120 points, or nearly 1 percent, and the other two major indexes also closed lower.

Among major economic issues that could result from a shutdown: delays in processing FHA housing loan applications -- a potential drag on the housing recovery -- and the potential loss of government spending that's helping prop up the economy, said Christine Romans, host of CNN's "Your Money."

"You've got an economy right now that's very tied to government spending and government contracts, so that could have a ripple effect all across Main Street," she said on CNN's "New Day."

If the government does shut down, it would be the first time it has happened in more than 17 years. That previous shutdown, sparked by a budget battle between Democratic President Bill Clinton and a Republican Congress, lasted for 21 days.

While the military will remain on duty, as will many essential public safety, health and welfare operations, many government offices will close. About a quarter of the federal government's 3.3 million employees -- those frequently referred to as "nonessential" -- will be told to stay home from work until the shutdown is over.

Attorney General Eric Holder and Defense Secretary Chuck Hagel said essential crime prevention and military services would continue, but some workers would be furloughed. Holder said he would cut his pay by the same amount as the most severely affected Justice Department employees because "we are all in this together."